The Centre for Independent Studies (CIS) recent report on Australia’s international student industry warned that universities had badly lowered entry and teaching standards to attract the highest share of international students in the developed world:
Australian universities routinely compromise admissions standards to accommodate international students. Preparatory programs for students with lower English language test scores function as a paid work-around for international students who do not meet admissions standards. By prominently marketing such alternative pathways, Australian universities are in effect taking actions that reduce their financial risks by increasing their standards risks…
Measured on a per capita basis, Australia now hosts more international students than any other major country in the world, as depicted in Figure 2…
The fact that international students pay much higher fees than domestic ones for the same courses strongly incentivises universities to reduce admissions and academic standards to accommodate international students. Alternative admissions routes that allow international students to circumvent English language requirements and the widespread use of commission-based brokers invite willful negligence and outright abuse, as reported in the ABC Four Corners program ‘Cash Cows’.
…recruiting [more students] would likely require Australian universities to reach deep down into the talent pool, reducing standards still further…
The CIS paper also warned that Australia’s universities have become overly reliant on international student fees, which accounted for around one quarter of university revenue in 2017:
…between 2012 and 2017, roughly two-thirds of Australian universities’ increase in total revenue was “driven by increased international student fees,” according to the Australian Department of Higher Education and Training (DET), with the remaining growth due to increases in Commonwealth financial assistance. In 2017, international student fee revenue accounted for 23.3% of the higher education sector’s total revenue, up from just 16.3% in 2013 when international students were already a prominent presence on Australian campuses…
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The ABS’ education export data shows the boom in fees more clearly. As shown in the next chart, aggregate international student fees more than doubled between 2013 and 2017, from $7.1 billion to $15.0 billion:
With this background in mind, the Canberra Times yesterday published an interesting report on how the Australian National University (ANU) has plundered a record $320 million in fees from international students in 2018 ahead of placing a cap on enrolment numbers:
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The Canberra institution raked in $320 million in fees from both onshore and onshore international students last year, an increase of 26 per cent on the previous year’s takings.
In the same period, the number of international students studying at the university rose by 17 per cent to 10,623.
That takes the proportion of overseas students to two out of every five people enrolled at ANU.
The uptick helped push the university’s revenue to $1.375 billion, up from $1.256 billion in 2017…
The report said: “the strong growth in international student numbers and revenue … led the ANU Vice-Chancellor, Professor Brian Schmidt AC, to announce late in 2018 that the university would be capping further growth in international student numbers”.
The boom in international student fees is coming to an end, however, with Australia’s two biggest source nations – China and India – both facing stiff headwinds, Australia’s universities facing increasing competition for students from competitor nations, greater scrutiny surrounding university entry and teaching standards, as well as reduced incentives following permanent visa cuts (see here and here).
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
